Reserve Bank of Fiji issues guidelines for local Boards and on microfinance for banks
The Reserve Bank of Fiji has issued three new policy guidelines for licensed banks. The guidelines include :
- Minimum Guidelines for the Establishment of a Local Advisory Board;
- Policy Guideline on Complaints Management; and
- Minimum Requirements for Commercial Banks on Internal Micro finance Divisions and Units.
Of note are the guidelines for the establishment of local advisory boards and that for establishment of internal micro finance divisions by banks operating in Fiji.
Currently, whilst a branch of a foreign bank operating in Fiji is headed by a General Manager (or something similar), he/she and the Fiji operations reports directly to a division of the bank that looks after its foreign operations, at the bank's country of incorporation.
Policies on trading and business are currently established by the foreign branch bank's head office with its Fiji operations requested to comply with those. The establishment of local advisory boards should facilitate the more rigorous review of the applicability of some of those policies to Fiji.
An advantage of a local advisory board is that it would, hopefully, also look into more proactive product development that best suits the customer profiles of Fiji banks, rather than the "advanced and complicated" needs of a foreign customer.
With regard to the other policy requiring the establishment of internal micro finance divisions within banks in Fiji, given Fiji's current economic and business environment, focusing on the establishment of micro and small enterprises and providing necessary training to those interested in how to run a business, would be of immense benefit to the country.
In recent years, most people have been displaced off land and from regular paid employment. Instilling a business and entrepreneurial focus on such citizens will help promote a financially independent attitude that will drive them to fend for themselves by running their own businesses. This will reduce the "hand-out mentality" and a heavy reliance on Government and social security and social welfare safety nets.
Looking at, and developing other incentives to promote the development of small and micro enterprises, would be of benefit to Fiji in the areas of :
- subsidised training for budding business people and entrepreneurs;
- subsidised taxes (perhaps for the first few years of operations until businesses get on their feet);
- setting up commercial tax free zones for such small businesses, subsidised procurement prices for essential business overheads; and
- setting up centres where business owners can learn from each other's experiences and share their own experiences and challenges as well.
The move by the Reserve Bank of Fiji in establishing these policies are commendable and we hope that the objectives of these various policies are met.
The guidelines take effect from 1 January 2010.